Monsanto said to “squeeze” competitors

Dec 17, 2009

An Associated Press article accuses Monsanto of “squeezing” its competitors, controlling smaller seed companies and dominating the multibillion-dollar market for genetically altered seeds through its business practices.

The article, which is said to rely on a review of confidential contracts between Monsanto and its seed partners, appeared in several newspapers Monday (Dec. 14). Monsanto said the article “missed the mark” in a number of areas.

“With Monsanto’s patented genes being inserted into roughly 95 percent of all soybeans and 80 percent of all corn grown in the U.S., the company is also using its wide reach to control the ability of new biotech firms to get wide distribution for their products,” the article by AP agribusiness writer Christopher Leonard said.

The article said the company’s methods are spelled out in a series of confidential commercial licensing agreements obtained by AP. The contracts include basic terms for the selling of engineered crops resistant to Monsanto’s Roundup herbicide along with agreements for other Monsanto traits.

“Our business has grown tremendously over the years thanks to an early investment in biotechnology, adding new approaches to historic breeding, and a decision to broadly license the results of those investments to anyone who wanted them, including our biggest direct competitors,” Monsanto said in a statement released to ag media.

“The growth of our business cannot be attributed to any forced use by customers or to blocking any competitors. Our licenses enable the use of our traits; they do not require the use of our traits. Seed companies and farmers are free to move completely away from Monsanto traits at any time.”

The AP article said Monsanto has used its agreements to spread its technology — “giving some 200 smaller companies the right to insert Monsanto’s genes in their separate strains of corn and soybean plants. But, the AP found, access to Monsanto’s genes comes at a cost, with plenty of strings attached.”

Monsanto said those companies can choose to exit their agreements every season. “If competitors invented a more attractive option, the industry could move to it immediately. Monsanto works hard to offer better and more valuable products because that is the only way we keep anyone's business.

“A depiction that somehow our actions are hurting small companies is just plain wrong. The facts are no seed company has invested more in the last ten years to bring new seed products to farmers than Monsanto, and no company has done more to broadly license those inventions than Monsanto.”

The AP said a contract provision bans independent companies from breeding plants that contain both Monsanto’s genes and the genes of any of its competitors, unless Monsanto gives prior written permission. The article claims the practice effectively blocks competitors from inserting their traits into plants that already contain Monsanto’s.

Monsanto claims no company has done more to enable stacked trait product offerings, including licensing competitive traits. “We’ve worked with a number of globally integrated companies to develop stacked trait products and offer them to growers. We were also recently able to highlight the specific stacking rights Pioneer Hi-Bred has with our business.

“Our licensing agreements, which have been used to support the development of and availability of these products, are pro-competitive and have enabled literally hundreds of seed companies – including all of our major direct competitors – to offer thousands of new seed products to farmers.”

The article quoted Iowa State University economist Neil Harl as saying Monsanto may now have control over as much as 90 percent of seed genetics. “The upshot of that is that it’s tightening Monsanto’s control and makes it possible for them to increase their prices long-term.”

In its response, Monsanto said the statement does not reflect reality. “Monsanto does not control nor supply the underlying seed genetics at anywhere near this level. In fact, Pioneer Hi-Bred holds the leading position in the U.S. soybean industry with about one quarter of the seed market. In corn, Monsanto’s brands are slightly larger than Pioneer with each of us supporting about one-third of the seed market.”

Monsanto took specific exception to comments attributed to DuPont’s attorney, which suggest a requirement for licensees to destroy seed if there is a change of ownership. “Those are absolutely false. Our standard agreements with licensed seed companies specifically provide them with an opportunity to sell out their inventory over a period of time, if they are acquired by another company. Our agreements would also not require a seed company to pay for a product they don’t sell.”

The article also notes Monsanto’s business strategies and licensing agreements are reportedly being investigated by the U.S. Department of Justice and two state attorneys general to determine if they violate antitrust laws.